When we have an omitted variable, the beta estimated can be written: B₁ =B1 + B₂01 The "bias" (how far off our estimate is from the true B1) is B2 times d1. What is d1?

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Chapter1: Making Economics Decisions
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When we have an omitted variable, the beta estimated can be written:
B₁ =B1 + B₂01
The "bias" (how far off our estimate is from the true B1) is B2 times d1.
What is d1?
the change in X2 for a unit change in X1
the change in Y for a unit change in X2
O the change in Y for a unit change in X1
the change in X1 for a unit change in X2
Transcribed Image Text:When we have an omitted variable, the beta estimated can be written: B₁ =B1 + B₂01 The "bias" (how far off our estimate is from the true B1) is B2 times d1. What is d1? the change in X2 for a unit change in X1 the change in Y for a unit change in X2 O the change in Y for a unit change in X1 the change in X1 for a unit change in X2
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